Articles Posted in Insurance

You pay your insurance premiums for years, on time, every month, every year.  When you pay your premiums, you hope you never need your insurance because that means something bad has happened – a car wreck, a tree has fallen on the home, a water pipe has burst and flooded your home, a hurricane has wrecked your home, an illness or death has struck your family.  Yet you take comfort in knowing that your insurance company will uphold their end of the bargain and pay your claim when tragedy does strike.  Unfortunately, many Alabamians have found out the hard way that insurance companies don’t always uphold their end of the bargain.  Despite paying premiums for years, people are sometimes left stranded by their insurance companies when they need them most.  Fortunately the law has a way to handle this situation, though it is often not easy or quick.

In Alabama there are two causes of action against insurance companies when they wrongfully deny a claim.  You can sue for breach of contract, and you can sue for bad faith.  Breach of contract is pretty straightforward.  You have a contract and the insurance company did not uphold their end of it.  There is good and bad news for consumers about this.  The good news is that if the claim involves your home, you get to not only ask for the claim to be paid, but you get to ask for extra damages for mental anguish and emotional distress.  These are legal terms for the aggravation, stress and hardship you have suffered by having an insurance company leave your home unrepaired.  The bad news is that claims for breach of contract for any other type of insurance are limited to simply asking for your claim to be paid.  This often leaves people out significant amounts of money or without a way to go to court because they either have to pay a lawyer to take their case to court, or it does not make sense to hire a lawyer to handle the claim if the amount is small.

Fortunately, Alabama also recognizes insurance bad faith.  Bad faith can be proven when an insurance company either refuses to investigate a claim or uses questionable methods for denying coverage.  If an insurance company makes up a reason to deny a claim or uses ambiguous language in the policy to deny a claim, they can be liable for bad faith.  Insurance policies are often drafted in ways that make it difficult for consumers to understand them.  Insurance companies are supposed to interpret their policies in such a way as to find coverage when it could possibly be available.  However, insurance companies often take advantage of the complex language in their policies to deny coverage and leave people in a real bind.  The good thing about insurance bad faith is that people can sue to have their claim paid, they can sue for mental anguish and emotional distress, and they can also sue for punitive damages to punish companies for acting against their policyholders’ interests.

When a loved one is in an automobile accident that results in a serious injury or even death, it is not uncommon for a family to hire a law firm to represent their interests.  Medical bills, lost wages, the inability to pay for basic things in life because of a loss of income, pain, rehabilitation, loss of life or loss of the enjoyment of life – these are all things that no one is truly able to understand until they have to go through it.  If a serious injury or death is caused by the bad driving or bad decisions of another driver, that person needs to be held accountable for the harm they caused.

Unfortunately, most people driving the roads are not adequately insured to cover a serious injury or death claim.  In Alabama, the minimum insurance limits that are required by law for a driver is $25,000.  If a person with minimum limits seriously injures or kills your loved one, $25,000 is all that is available from the opposing driver’s insurance, which is a drop in the bucket for a serious injury or loss of a loved one.  Many people carry their own underinsured motorist coverage that can also pay, but it is extremely rare for these policies to provide adequate coverage for a serious injury or loss of life.

While most people assume the insurance of the opposing driver and your own insurance is the only possible source of recovery, there are always others avenues that need to be explored by a lawyer in a serious injury or fatal car accident.  One of the main areas our firm researches when helping a family with a serious injury or loss of life is defects in the vehicles themselves.  An issue with steering or a defective tire that blew out may have cause the other car to lose control.  There may have been a defective part on one of the cars that could have prevented the accident from happening in the first place.

When you buy an insurance policy, you are paying for protection and peace of mind in case of serious losses in the context of automobile accidents, illness, disasters, and other catastrophic events. Unfortunately, many insurers dispute payments for claims in order to save money and make a greater profit, thereby causing stress for policyholders. However, insurers owe their policyholders an implied covenant of good faith and fair dealing. They are required to treat policyholders fairly and in good faith.

When an insurer disputes or denies an insurance claim that is owed without having a reasonable basis for doing so, it acts in bad faith and breaches the implied covenant of good faith and fair dealing.

Like other states, Alabama recognizes a tort of insurance bad faith. A policyholder can bring a bad faith claim when an insurer wrongfully denies a claim against the policy. Specifically, a plaintiff must prove the existence of an insurance contract between the plaintiff and the defendant, the defendant’s breach of the contract, a refusal to pay a claim, a lack of any reasonable or arguable grounds for the refusal, and the insurer’s actual knowledge that there is no reasonable basis to deny the claim. There is a conditional fifth element that if the allegation related to the third element is an intentional failure, the plaintiff must prove the intentional failure to determine whether there is an arguable basis for the denial. In a normal bad faith case, a plaintiff must be able to get a directed verdict on a breach of contract claim before he or she can recover damages for bad faith.

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Look at this picture.  It’s called a stereogram, also known as a 3D image within an image.  They were popular in the 90s and have been around ever since.  Within the beautifully colored image is hidden the words “Happy New Year.”  It takes practice and a lot of time to be able to see the image, but it’s there.  You may have to cross your eyes and uncross them, or get real close to the screen and slowly back away, but eventually you can see the hidden image.

Being a trial lawyer can be a lot like looking at a stereogram.  Some of the greatest results we’ve ever had for clients came from cases that, on the surface, may not have looked like much of a case.  People have a natural tendency to see what is on the surface and not look much further.  They also have a natural tendency to not want to keep looking to see if the situation really is as it initially appears.  But any good trial lawyer will tell you that you’ve got to keep staring at the picture, and if you stare long enough, if you dig into the facts deep enough, you can often find another picture hidden in plain sight.*  Here are a few examples:

A car gets blindsided by a big truck, killing the occupants of the car.  The driver of the 18 wheeler says the car pulled right out in front of him, and he never had a chance to stop or put on the breaks.  The officer then writes the accident up as the car pulled out in front of the big truck.  Many families, struck with grief over the situation, will accept what the officer reports and move on.  Some, however, will hire a lawyer to look into it.  We have seen this scenario many times.  When this case comes to us, we hire a professional engineer to do an accident reconstruction to tell us exactly where the vehicles were, how fast they were going, where the impact took place on the road and on the vehicles, and what happened in the accident.  We hire a trucking expert to look at the records of the trucking company and driver to see if they have any major safety violations.  In short, we do a very thorough job of investigating the case.  And what we’ve found out many times is at odds with what was reported – the 18 wheeler was exceeding the speed limit; the driver was over his time driving and was rigging his log books so he could drive more; the big truck veered into the other lane and hit the car instead of staying in his lane and missing it; the 18 wheeler driver, had he been paying attention, had 5 or 6 seconds to see the car and avoid the collision; the truck driver was distracted and on his cell phone.  What was reported as an accident that was our client’s fault turns out to be a really good case against the trucking company.

Ocwen Loan Servicing, LLC, Assurant, Inc., Standard Guaranty Insurance Company and American Security Insurance Company have been named as defendants in a class action filed in the Southern District of Florida alleging that the forced place insurance sold by them is overpriced and illegal.  The Plaintiff alleges that Assurant and QBE control nearly the entire market for forced placed insurance policies and, to keep that control, they pay lenders “kickbacks” based on the premiums in forced place policies.  It is alleged that insurers are also charging borrowers for insurance coverage that is backdated to periods when no claims were made or for coverage that is not needed.

Forced place insurance premiums have quadrupled between 2004 and 2011, from $1,485,000,000 in 2004 to $5,692,000,000 in 2011.  Assurant and QBE/Balboa control 99.7% of this market.

On March 21, 2013, the New York Department of Financial Services’ (“NYDFS”), investigation into force-placed insurance practices “produced a major settlement with the country’s largest ‘force-placed’ insurer, Assurant, Inc. . . . [The settlement] includes restitution for homeowners who were harmed, a $14 million penalty paid to the State of New York, and industry-leading reforms that will save homeowners, taxpayers, and investors millions of dollars going forward through lower rates.” Further, under the Consent Order entered, Assurant and its subsidiaries (including ASIC and SGIC), are prohibited from paying commissions to any servicers or entity affiliated with a servicer on force-placed insurance policies obtained by the servicer. See Assurant & NYDFS Consent Order, Mar. 21, 2013, at 9.

Almost all personal injury claims lawyers handle involve insurance at some point.  If the Plaintiff has health insurance, the health insurance company pays most of the bills and asks to be paid back if a recovery is made.  Almost all Defendants in lawsuits brought by attorneys have insurance.  Automobile accidents almost always involve liability auto insurance.  Premises liability (slip and fall or other on-property injury), other types of general negligence, and many dangerous product and fraud claims will be defended and paid by a commercial general liability policy.

While the courts in Alabama in recent years have allowed Defendants to admit evidence that medical bills were reduced and paid by medical insurance for the Plaintiff, the Alabama Supreme Court has gone in the exact opposite direction for telling the jury about evidence that a defendant is insured and will not ultimately pay the verdict.

Alabama Rule of Evidence 411 states that liability insurance cannot be admitted “upon whether the issue whether the person acted negligently or otherwise wrongfully.”  In other words, you cannot imply that a person knew they were going to act dangerously, so they went out and bought insurance.  This is logical.  But the rule in Alabama has been taken to the extreme, where a mistrial will be ordered if there is any mention that a defendant has insurance.  The original purpose of the rule has been lost and replaced with a rule that says defendants will be prejudiced if the jury knows they have insurance because the jury may want to award more against an insurance company.  In fact, the opposite is often the case.  Rather than focusing just on how much the plaintiff has been injured, juries who don’t know that insurance will pay the award also think about whether a large award, even if it is warranted, may put a company out of business or force an individual to sell their home.

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